India, ASEAN Celebrate 20th Anniversary With Two FTAs

India and the Association of Southeast Asian Nations (ASEAN) began a two-day meeting in New Delhi on Thursday, to commemorate twenty years of relations between New Delhi and the ten-member organization.

"India is hosting the ASEAN-India Commemorative Summit in New Delhi on December 20 and 21, 2012 to mark the 20th anniversary of the ASEAN-India dialogue partnership and the 10th anniversary of ASEAN-India Summit-level partnership. The theme of the summit is ‘ASEAN-India Partnership for Peace and Shared Prosperity’."

Although ASEAN-India ties stretch back to 1992, the past few years have seen rapid growth. India’s July 2003 accession to ASEAN’s Treaty of Amity and Cooperation in Southeast Asia was one impetus for this expansion. During the same year, at the 2nd ASEAN-India Summit, India and the ten-member organization signed the ASEAN-India Framework Agreement on Comprehensive Economic Cooperation, which pledged both sides would work to establish an ASEAN–India Free Trade Area (FTA) covering goods, services, and investments.

The first of these came in 2009 when, after six years of negotiations, the two sides signed the ASEAN-India Trade In Goods (TIG) Agreement. The AITIG came into force the following year and ASEAN-India economic relations have enjoyed a boom in the years since.

“ASEAN-India trade has been growing at over 22 percent during the last six years and, in fact, trade between India and ASEAN in 2011-2012 has increased by more than 37 percent and the trade now is $79 billion, which is more than the target of $70 billion set [at the 7th ASEAN-India Summit in Thailand in October 2009],” Indian Foreign Secretary Ranjan Mathai pointed out this week.

Earlier this year, Shri Anand Sharma, India’s Minister of Commerce, Industry, & Textiles, also said the two sides expected two-way trade to top $100 billion by 2015.

Reaching this goal just got much easier as New Delhi and ASEAN concluded negotations for FTAs in services and investments during the first day of the ASEAN-India Commemorative Summit.

"This represents a valuable milestone in our relationship. I am confident it will boost our economic ties in much the same way the FTA in goods has done,” Prime Minister Manmohan Singh said of the two new FTAs when addressing the summit on Thursday.

Even so, this expansion in ASEAN-India trade is still dwarfed by ASEAN’s trade with other economic partners, most notably China. Last year ASEAN-China two way trade grew 23.9% to U.S. $362.85 billion, according to the Chinese government. By contrast, Sino-Indian trade in 2011 was just U.S. $73.9 billion, albeit that was a nearly 20% increase from the year before.

Still, the dynamics of the trilateral ASEAN-China-India relationship could change in the years ahead, as both ASEAN and India grow increasingly wary of China’s rising power. New Delhi has indicated that it may seek to use growing apprehension towards Beijing among its neighbors as a means of more fully implementing its “Look East” policy. This has included steadily strengthening relations with Japan in recent years, as well as entering into a joint oil exploration contract with Vietnam for oil blocks in the South China Sea.

Indeed, Prime Minister Singh suggested on Thursday that New Delhi views the FTAs through a strategic as well as economic lense:

"We see our partnership with ASEAN not merely as a reaffirmation of ties with neighbouring countries or as an instrument of economic development, but also as an integral part of our vision of a stable, secure and prosperous Asia and its surrounding Indian Ocean and Pacific regions," Singh said.

Unsurprisingly, India's growing ties with ASEAN has made it the target of criticism from China on multiple occassions. New Delhi has therefore had to maintain a careful balancing act between deepening ties with China’s neighbors and not unnecessarily provoking Beijing, which could retaliate in a number of ways, including: its alliance with Pakistan, on the Sino-Indo contested border, or by increasing the frequency of Chinese naval deployments in the Indian Ocean.

As ASEAN nations increasingly look to other powers like Japan and India to help them contend with China’s rise, New Delhi may find it difficult to not upset this fragile balance. It should count on China to remind it each and every time it has failed to maintain this balance.

Zachary Keck is assistant editor of The Diplomat. You can find him on Twitter: @ZacharyKeck.